Resale Externality and the Used Housing Market

The selling prices of used houses may not fully reflect the maintenance spending of current owners when prospective buyers are unable to conduct a thorough inspection before purchase. This article investigates how this resale externality problem affects the maintenance expenditures of homeowners. After considering both observable and unobservable repair expenses, the analysis shows that the resale externality reduces not only maintenance expenditures, but also household mobility. A treatment effects model is used to estimate the simultaneous relationship between mobility and maintenance in the Japanese resale housing market. The results indicate that the resale externality has a significant negative impact on maintenance expenditures.     

Externalities of residential property flipping

This study investigates whether flipping activities impose an externality on the transaction prices of the neighboring nonflipped properties. Using a data set of residential property transactions in Clark County, Nevada for the period 2003–2013, we find that flippers impose a significant positive impact on the price of neighboring nonflipped properties in an up market, but a significant negative effect in a down market. This procyclical impact of flipping activity contributes to the volatility of housing prices, hence magnifying boom and bust cycles and increasing the likelihood of a mortgage crisis.     

Urban Land Development and its Prices: The Effects of Conversion Costs with Redevelopment

This paper analyzes urban land development when landowners anticipate a future large-scale redevelopment by a third party developer. Landowners' initial development activities can deter such redevelopment because they impose two conversion costs on the redeveloper: demolition costs and landowners' reservation prices. These costs are eventually borne by the landowners when the developers' market is competitive. For the landowners' initial development activities, we analyze both the efficient solution and the noncooperative solution under the Nash equilibrium. In both cases, the possibility of redevelopment results in a lower level of initial development due to the conversion costs, but increases land prices. However, the magnitude of their effects is smaller in the Nash solution due to an externality. The presence of such an externality provides a rationale for zoning and urban planning.     

Why Are Foreclosures Contagious?

This article investigates the mechanism by which foreclosed properties depress neighboring property prices. Using a novel dataset on housing capital expenditure, I verify as accurate the claim of disinvestment theory made in earlier studies. When capital expenditure investment, neighborhood price trends, number of Multiple Listing Service listings and neighborhood fixed effects are controlled for, the negative effect on property prices is significant from nearby foreclosures, real estate owned (REO) listings and REO sales, but not from default and delinquent properties. The effect is larger in a depressed market than in an appreciating market. I argue that the most plausible explanation for these results is that a foreclosure discount drives down the reference prices for nearby properties and depresses neighborhood values. This discount information is revealed to the public through foreclosures, REO listings and REO sales.     

Strip Clubs, “Secondary Effects” and Residential Property Prices

Municipalities regulate sexually oriented businesses (SOBs) through the “secondary effects” doctrine, which justifies limiting First Amendment speech protections inside SOBs. Negative effects of SOBs on nearby neighborhood quality are a frequently cited secondary effect. Little empirical evidence exists that SOBs generate such negative externalities. If SOBs generate negative externalities, then nearby property prices should decrease when a strip club opens. We estimate regression models of housing prices to determine the effect of new clubs on nearby residential property prices in Seattle, exploiting the termination of a 17‐year moratorium on openings and find no evidence that strip clubs have “secondary effects.”     

Immigration and the Property Market: Evidence from England and Wales

This article investigates the link between immigration and property markets in England and Wales. Evidence from fixed effects and shift‐share–based instrumental variable regressions suggests that an increase in regional immigration, depending on the specification, either decreases prices at the lower end of the distribution up to the median or leaves them unchanged and has (almost) no effect on mean property prices or prices above the median. The evidence suggests that these findings can be explained through an interaction between the markets for rented and owned properties as well as through changes in the usage of housing space.     

交易费用视角的政府行为 --以温州模式为例

温州模式发展初期，地方政府通过保护产权、内化外部效应等措施降低了交易成本，而地方政府对经济的弱控制客观上又降低了因过度干预形成的交易成本。但是，随着温州民营经济的发展，地方政府过去偏弱的服务功能，使得温州民营经济发展正面临着投资环境相对恶化形成的交易成本约束。在现代市场经济中，要通过建立规模适度的、行为规范的、服务型的政府，降低市场交易成本，为经济发展提供良好的外部环境。     

Tax Limits and Housing Markets: Some Evidence at the State Level

Property tax limitations, as well as other tax and expenditure restrictions on state and local governments in the United States, date back to the late 19th century. A surge in property tax limitation legislation occurred in the late 1970s and early 1980s, and its effects on government revenue, school financing and educational quality have been studied extensively. However, there is surprisingly little literature on how property tax limits affect housing markets. For the first time, we examine the impacts of property tax limitations on housing growth, in addition to their impacts on housing prices. Using state‐level data over 23 years, we find that property tax limits increase housing prices (indexes) by approximately 2%. Property tax limits appear to have little impact on the growth in the housing stock, but education spending limits reduce the number of building permits by over 6%. Our indirect evidence suggests that the number of housing units may grow when property tax limits are accompanied by increases in other own‐source revenues to state government.     

Robust exclusion and market division through loyalty discounts

We show that loyalty discounts create an externality among buyers because each buyer who signs a loyalty discount contract softens competition and raises prices for all buyers. This externality can enable an incumbent to use loyalty discounts to effectively divide the market with its rival and raise prices. If loyalty discounts also include a buyer commitment to buy from the incumbent, then loyalty discounts can also deter entry under conditions in which ordinary exclusive dealing cannot. With or without buyer commitment, loyalty discounts will increase profits while reducing consumer welfare and total welfare as long as enough buyers exist and the entrant does not have too large a cost advantage. These propositions are true even if the entrant is more efficient and the loyalty discounts are above cost and cover less than half the market. We also prove that these propositions hold without assuming economies of scale, downstream competition, buyer switching costs, financial constraints, limits on rival expandability, or any intra-product bundle of contestable and incontestable demand.     

Substitutability and Complementarity of Urban Amenities: External Effects of Built Heritage in Berlin

This article analyzes the impact of designated landmarks on condominium transaction prices in Berlin, Germany. We test for price differentials between listed and nonlisted properties and study their impact on surrounding property prices. The proximity to built heritage is captured by the distance to listed houses and heritage potentiality indicators. Impact is assessed by applying a hedonic model to microlevel data, and this process also addresses spatial dependency. While our findings suggest that designated landmarks do not sell at a premium or discount, landmarks are found to have positive external effects on surrounding property prices within a distance of approximately 600 m.     

政府土地供应政策、行政调控政策对房价波动的影响——基于中国35个城市的证据

2016年中国面临了新一轮的房价上涨,政府调控对房价调节起着重要的作用。本文从中国35个城市2010～2016年的土地供应政策（土地竞拍过程中的额外规定）和行政调控政策（“限贷”、“限购”和住房规划政策）的变化来研究其对房价波动的影响,得出土地供应调控和“限购”政策对房价的显著正向作用,但“限贷”和住房规划政策对房的作用与预期相反并做了相应的分析,最后提出3个稳定房价的建议：（1）在供给侧的调控仍以增加土地供应为核心,各大城市统筹兼顾,突出重点。（2）在需求侧的调控则以“限贷”、“限购”为抑制房价上涨的短期有效的政策工具。（3）土地制度改革是稳定房价根本措施。     

Do Merger Efficiencies Always Mitigate Price Increases?

In a Cournot model with differentiated products, we demonstrate that merger efficiencies in the form of lower marginal costs for the merging firms (the insiders) lead to higher post‐merger prices under certain conditions. Specifically, when the degree of substitutability between the two insiders is not too high relative to that between an insider and an outsider, increased efficiencies may exert upward rather than downward pressure on the prices of the merging firms. Our results suggest that in cases where firms engage in quantity competition, antitrust authorities should not presume that efficiencies will necessarily mitigate the anticompetitive effects of the merger.     

Airport deregulation: Effects on pricing and capacity

We use a model of vertical relations between two congestible airports and an airline oligopoly to examine, both analytically and numerically, how deregulation may affect airports prices and capacities. We find that: (i) unregulated profit-maximizing airports would overcharge for the congestion externality and, compared to the first-best, would induce large allocative inefficiencies and dead-weight losses. They would restrict capacity investments but, overall, would induce fewer delays; (ii) Welfare maximization subject to cost recovery performs quite well, achieving congestion levels similar to a private-unregulated airport but without inducing such large traffic contraction; this puts a question mark on the desirability of deregulation of private airports; (iii) Increased cooperation between airlines and airports provides some improvements, but the resulting airport pricing strategy leads to a downstream airline cartel; (iv) When schedule delay costs effects are strong and airline differentiation is weak, it may be optimal to have a single airline dominating the airports, but this happens only when airports' pricing schemes render the number of airlines irrelevant for competition.     

When does dietary knowledge matter to obesity and overweight prevention?

Improving dietary knowledge has the potential to prevent obesity and overweight and, if effective, is a highly feasible policy measure. This paper proposes a new framework to examine the effects of dietary knowledge on nutrient intake and diet quality. The framework allows the effects to differ by one’s expectation about food availability (EFA). Using data from China, we find that dietary knowledge affects mainly the quantity of diet (e.g., lowering total calorie intake) when EFA is increasing, while it affects mainly the quality of diet (e.g., lowering the share of calories from oils) when EFA is decreasing. The effect on the quantity is larger among overweight adults, while the effect on the quality is more significant among non-overweight adults. Without distinguishing the direction of changes in EFA as in previous studies, the estimated effects of dietary knowledge tend to be smaller. Thus, as an anti-obesity measure, dietary education may be more effective than indicated by previous studies under the situations where EFA increases (e.g., introducing food coupons), while only marginally effective under the situations where EFA decreases (e.g., increasing real food prices).     

Appraisal-Based Real Estate Returns under Alternative Market Regimes

In this article we use Monte Carlo simulation to study the statistical properties of real estate returns. We set up a model where transactions prices are noisy signals of true prices. We then consider a number of appraisal rules, derived from Bayesian and non-Bayesian theory, to estimate the current true price and rate of return. The class of exponential smoothing and Kalman filter rules perform well at both the disaggregate (returns on an individual property) and aggregate (returns on a real property portfolio) levels. A special case of exponential smoothing (α= 1.0) places all weight on current market data. Since this case eliminates smoothing, our results suggest that appraisers should place all weight on current data (no weight on past data) provided that they want to estimate returns rather than values. However, these results should be used with caution if sales prices are very noisy.     

Congestion Effects of Spatial Growth Restrictions: A Model and Empirical Analysis

The present study characterizes the congestion effect of spatially designated growth controls, such as greenbelt or urban growth boundaries. The developed model demonstrates that the congestion externality caused by a binding growth restriction can understate total welfare costs of the regulation but overstate the amount of welfare transfer from renters of urban land to landowners. This article also examines costs and benefits of different development options given a binding growth restriction, and shows that non-consideration of the congestion externality is likely to skew choice toward high-density development. To test the hypothesized regulatory effect, a pooled time-series and cross-sectional analysis is performed with the land price data from Seoul, Korea. The results offer evidence of the gradient-flattening effect of the greenbelt regulation in the study area.     

The Subsequent Market Value of Former REO Properties

In this study, we find the subsequent price for a property initially sold as a real estate owned (REO) property occurs at market prices. The subsequent price to the REO purchaser is related to indicators that the property has been remodeled, renovated, or updated. This suggests that the difference between the price received by servicers/lenders that foreclose and sell a REO property, and the price received by subsequent property owners that sell is in large part due to timely improvements made postforeclosure. Lenders are not selling REO properties at irrational prices, but rather at prices that reflect the condition of the properties.     

Information Generation in Vertically Differentiated Markets*

In a model of vertical competition two firms draw costly public signals that are informative about the quality of their products and then competitively set prices. When each firm generates information independently from the other, there will be overinvestment (underinvestment) in information generation if the market share of the quality follower in the subsequent market equilibrium is high (low). Moreover, information generation by one firm has a positive externality on the other firm. Hence, coordination (e.g., via industry associations) increases information generation. When product qualities are endogenous, information generation may prevent quality degradation and thus have an additional social benefit.     

Commercial Real Estate Valuation, Development and Occupancy Under Leasing Uncertainty

A model of commercial property valuation is developed where individual property owners are price takers and tenants randomly arrive and depart. Spot lease and tenant reservation prices are stochastic and correlated and can divert from but eventually revert back to market equilibrium. Within this framework we examine built property values and vacancy rates for varying parameter sets representing differing markets and economic conditions. We also examine how potential and existing vacancies, spot lease prices and tenant reservation prices feed back into development decisions. We demonstrate how preleasing acts as a hedge to the developer against the risk of leasing uncertainty.